EXHIBIT (1)
FORM 8-K
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement"), dated August 16th, 2000,
is by and between Composite Solutions, Inc. ("CSI"), a Florida corporation,
Penultimo, Inc., a California corporation doing business as Anchor
Reinforcements ("Anchor"), and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇"), the owner of the
outstanding common stock of Anchor.
RECITALS
A. Anchor is a subchapter S corporation owned 100% by ▇▇▇▇▇▇▇▇▇.
B. CSI and ▇▇▇▇▇▇▇▇▇ wish to enter into a contractual agreement under
which ▇▇▇▇▇▇▇▇▇ will sell to CSI all rights, title, and interest of ▇▇▇▇▇▇▇▇▇
in Anchor.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained in this agreement, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, ▇▇▇▇▇▇▇▇▇ and
CSI, intending to be legally bound hereby, agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES AND
ASSUMPTION OF LIABILITIES
SECTION 1. PURCHASE AND SALE OF SHARES. Subject to the terms and
conditions of this Agreement, at the Closing, ▇▇▇▇▇▇▇▇▇ will sell, transfer,
convey, assign, and deliver to CSI, and CSI will purchase, acquire, and
accept from ▇▇▇▇▇▇▇▇▇, all shares of stock of Anchor, together with all of
Anchor's rights, properties, assets, claims, contracts, and business of every
kind, character, and description, whether tangible or intangible, whether
real, personal, or mixed, whether accrued, contingent, or otherwise, and
wherever located (collectively, the "Anchor Assets"), including minute and
stock books, except for any other documents or records which Anchor is
required by law to retain in its possession.
SECTION 2. CONSIDERATION. Subject to the terms and conditions of this
Agreement, in reliance on the representations, warranties, and agreements of
▇▇▇▇▇▇▇▇▇ and Anchor contained in this Agreement, and in consideration of the
sale, assignment, transfer, and delivery of the Anchor Assets, CSI will:
a. Pay to ▇▇▇▇▇▇▇▇▇ upon execution of this Agreement (the "Closing")
the sum of Five Hundred Thousand Dollars ($500,000.00);
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b. Issue to ▇▇▇▇▇▇▇▇▇ 150,000 restricted shares of CSI's common stock,
which ▇▇▇▇▇▇▇▇▇ shall hold and CSI shall repurchase as follows:
(1) Upon the market price of CSI's stock measured at each day's closing
equaling or exceeding $6.00 for a period of five (5) consecutive trading days
("Purchase Trigger"), CSI shall within thirty (30) days thereafter, purchase
and ▇▇▇▇▇▇▇▇▇ shall sell to CSI the 150,000 shares by paying ▇▇▇▇▇▇▇▇▇ $6.00
per share, for a total of $900,000.
(2) In the event that repurchase of the ▇▇▇▇▇▇▇▇▇'▇ 150,000 shares is
not triggered as described in Section 2.b.(1) above during the first two (2)
years after the Closing Date, then within thirty (30) days after the second
anniversary of the Closing Date, CSI shall purchase and ▇▇▇▇▇▇▇▇▇ shall sell
to CSI the 150,000 shares or all of the remaining shares held by ▇▇▇▇▇▇▇▇▇ at
that time, not to exceed 150,000 shares, by paying ▇▇▇▇▇▇▇▇▇ the market price
per share, adjusted for any stock splits or capital restructuring occurring
after the Closing Date, averaged over the ten previous trading days prior to
the second anniversary of the Closing Date with a maximum price of $6.00 per
share, but not less than $1.50 per share (the "Mandatory Repurchase Date").
(3) Nothing contained herein otherwise prevents CSI and ▇▇▇▇▇▇▇▇▇ from
negotiating sales of all or part of such shares for repurchase by prior to
the earlier of the Trigger Date or the Mandatory Repurchase Date on such
terms as they both shall agree.
c. Enter into an employment agreement with ▇▇▇▇▇▇▇▇▇ for a term of two
(2) years at a salary of $60,000 per annum and a noncompetition agreement for
a period of five (5) years.
d. Within a reasonable period of time, CSI will develop an appropriate
stock and cash bonus plan for key employees of Anchor as CSI deems
appropriate in its sole and absolute business discretion.
▇. ▇▇▇▇▇▇▇▇▇ understands and agrees that the shares to be transferred
herein will have affixed thereto, a legend which states the following:
The stock represented by this certificate is restricted stock and is not
eligible for transfer to any person or entity except as provided in that
certain Stock Purchase Agreement entered among Composite Solutions,
Inc., Penultimo, Inc. and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ dated August 16, 2000. Said
agreement provides, among other things, for certain rights, obligations
and duties of the parties related to the sale and mandatory repurchases
of the shares represented hereby.
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SECTION 3. ASSUMPTION OF LIABILITIES
a. Subject to the terms and conditions of this Agreement, CSI will
assume and undertake to pay, satisfy or discharge the liabilities,
obligations, and commitments of Anchor arising on or after the Closing Date
under the contracts listed in Schedule A hereto and any other contracts
entered into between the date of this Agreement and the Closing which CSI
expressly agrees in writing to assume.
b. Except as set forth in Section 3.a of this Agreement, CSI expressly
disclaims any liabilities, obligations or commitments, direct or indirect,
absolute or contingent, of Anchor, ▇▇▇▇▇▇▇▇▇, or any other person of any
nature whatsoever without regard to whether any such liability, obligation,
or commitment has been disclosed. Without limiting the generality of the
foregoing, except as set forth in Section 3.a of this Agreement, CSI will
take title to the Anchor Assets, including ▇▇▇▇▇▇▇▇▇'▇ shares, free and clear
of any and all undisclosed liabilities, obligations, or commitments of
Anchor, ▇▇▇▇▇▇▇▇▇, or any other person, and Anchor and ▇▇▇▇▇▇▇▇▇ will be
solely responsible for the satisfaction and discharge of all such
liabilities, obligations, and commitments, and will indemnify and hold
harmless CSI against all those liabilities, obligations, and commitments.
Without limiting the generality of any of the foregoing, except as set forth
in Section 3.a, CSI will not assume any liabilities or obligations of Anchor,
▇▇▇▇▇▇▇▇▇, or any other person for:
(1) Any litigation, arbitration, or administrative proceedings
proceedings pending, threatened, or commenced after the Closing Date against
or relating to Anchor or ▇▇▇▇▇▇▇▇▇ or directly or indirectly arising out of
or based on facts existing on or prior to the Closing Date relating to the
business or operations of Anchor, ▇▇▇▇▇▇▇▇▇, or the Anchor Assets;
(2) Any liability or obligation as guarantor, surety, cosigner,
endorser, comaker, or indemnitor;
(3) Any environmental claims arising from actions taken by Anchor or
▇▇▇▇▇▇▇▇▇, or from the failure to take action by Anchor or ▇▇▇▇▇▇▇▇▇ if the
context so requires, on or prior to the Closing Date;
(4) Any liabilities for taxes relating to the business or operations of
Anchor, ▇▇▇▇▇▇▇▇▇, or the Anchor Assets on or prior to the Closing Date;
(5) Any liability or obligation of Anchor to ▇▇▇▇▇▇▇▇▇;
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(6) Any liability or obligation directly or indirectly arising out of
or based on facts existing on or prior to the Closing Date between Anchor,
▇▇▇▇▇▇▇▇▇, and any of the employees, former employees, employees' collective
bargaining representatives or job applications of Anchor;
(7) Any claims relating to health insurance, workers compensation,
severance or other employee benefits arising from, or in connection with, the
employment of persons on or prior to the Closing Date; and
(8) Any liens, pledges, claims, security interests, conditional sales
contracts or other encumbrances upon or relating to Anchor, ▇▇▇▇▇▇▇▇▇, or the
Anchor Assets whatsoever, whether existing at the date of this Agreement or
arising at any time after the date of this Agreement up to and including the
Closing Date.
SECTION 4. TIME AND PLACE OF CLOSING. The closing of the transactions
contemplated by this Agreement (the "Closing") will take place on a date
designated by CSI within fifteen (15) days after the last of the conditions
specified in Articles VII and VIII of this Agreement has been satisfied (or
waived by the party entitled to waive that condition). The Closing will be
held at 9:00 a.m., in the offices of CSI, located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
SECTION 5. DELIVERIES AT THE CLOSING.
a. At the Closing, CSI will deliver to ▇▇▇▇▇▇▇▇▇:
(1) Confirmation of wiring to the trust account of ▇▇▇▇▇▇▇▇▇'▇ attorney
the sum of Five Hundred Thousand Dollars ($500,000.00);
(2) A certificate representing 150.000 restricted shares of CSI's
common stock, issued in the name of ▇▇▇▇▇▇▇▇▇ and legended with the
restrictions to transfer set forth in this Agreement;
(3) An employment and noncompetition agreement between CSI and
▇▇▇▇▇▇▇▇▇ as discussed herein.
b. At the Closing, ▇▇▇▇▇▇▇▇▇ will deliver to CSI (i) a duly executed
certificate of transfer of the shares of Anchor to CSI and (ii) such
opinions, certificates, and other documents required to be delivered by
Anchor and ▇▇▇▇▇▇▇▇▇ at or prior to the Closing as are requested by CSI to
accomplish the purposes of this Agreement.
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SECTION 6. FURTHER ASSURANCES. After the Closing, Anchor and/or
▇▇▇▇▇▇▇▇▇ will from time to time, at the request of CSI and without further
cost or expense to the other party, execute and deliver any other instruments
of conveyance and transfer, and take any other actions as may reasonably be
requested in order to more effectively consummate the transactions
contemplated by this Agreement to vest in CSI good and marketable title to
the Anchor Assets and ▇▇▇▇▇▇▇▇▇'▇ shares being transferred including, without
limitation, assistance in the collection or reduction to possession of any
such Assets.
SECTION 7. MAIL RECEIVED AFTER CLOSING. Following the Closing CSI may
receive and open all mail addressed to Anchor and deal with the contents of
that mail in its discretion to the extent that that mail and its contents
relate to Anchor or the Anchor Assets sold to CSI or any of the obligations
or liabilities assumed by CSI pursuant to the Agreement.
SECTION 8. PAYMENT OF TAXES AND OTHER CHARGES. Any provision of this
Agreement to the contrary notwithstanding, Anchor and ▇▇▇▇▇▇▇▇▇ will pay all
transfer taxes, including, without limitation, all real estate transfer, deed
conveyance and lease assignment fees or taxes, conveyance taxes, sales and
use taxes, stamp taxes, bulk sales taxes, fees in connection with
registrations or permits, and other taxes, charges or assessments which arise
out of or are imposed upon the sale or transfer of the Anchor Assets and
▇▇▇▇▇▇▇▇▇'▇ shares to CSI. Anchor and ▇▇▇▇▇▇▇▇▇ will prepare and file any
reports, returns or other information required to be filed to any taxing
authority relating to those transfer taxes and will timely pay the amounts
shown on those returns and any additional amounts due or owing, including,
without limitation, interest, penalties, and additions to tax (including
interest, penalties and additions imposed as a result of Anchor or
▇▇▇▇▇▇▇▇▇'▇ failure to pay any such taxes) to the appropriate taxing
authority. Anchor and ▇▇▇▇▇▇▇▇▇ will be responsible for all other taxes which
relate to the use and operation of the Anchor Assets and ▇▇▇▇▇▇▇▇▇'▇ shares
or other operations of Anchor and which are attributable to periods up to and
including the Closing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF ANCHOR AND ▇▇▇▇▇▇▇▇▇
Anchor and ▇▇▇▇▇▇▇▇▇ represent and warrant to CSI as follows:
SECTION 1. CORPORATE ORGANIZATION. Anchor is a corporation duly
organized, validly existing and in good standing under the laws of the State
of California and has full corporate power and authority (a) to carry on its
business as it is now being conducted, and (b) to own the properties and
assets it now owns. The copies of the Articles of Incorporation and Bylaws of
Anchor provided to CSI are complete and correct copies of those instruments as
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presently in effect. The authorized capital stock of Anchor consists of
100,000 shares of common stock, without par value, of which 100,000 shares
are issued and outstanding, all of which are owned by ▇▇▇▇▇▇▇▇▇, free and
clear of any claims, liens, or other encumbrances. All issued and outstanding
shares of common stock of Anchor are validly issued, fully paid and
nonassessable.
SECTION 2. AUTHORIZATION. Anchor and ▇▇▇▇▇▇▇▇▇ have full corporate
power and authority to enter into this Stock Purchase Agreement and to carry
out the transactions contemplated by this Agreement. The Board of Directors
of Anchor and the Shareholders of Anchor have unanimously approved this Stock
Purchase Agreement, and have duly and validly taken all actions required by
law, the Articles of Incorporation or Bylaws of Anchor, or otherwise to be
taken by them to authorize the execution and delivery of this Stock Purchase
Agreement and the consummation of the transactions contemplated by this
Agreement. This Stock Purchase Agreement is upon execution a legal, valid,
and binding agreement of Anchor and ▇▇▇▇▇▇▇▇▇, enforceable in accordance with
its terms, except that (a) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before which any
such proceeding may be brought.
SECTION 3. NO VIOLATION. Neither the execution and delivery of this
Stock Purchase Agreement nor the consummation of the transaction contemplated
by this Agreement will:
a. Violate any provision of the Articles of Incorporation or Bylaws of
Anchor;
b. Violate, or be in conflict with or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate the performance
required by, or cause the acceleration of the maturity of any debt or
obligation pursuant to, or result in the creation or imposition of any
security interest, lien or other encumbrance upon any property or assets of
Anchor under, any agreement or commitment to which Anchor is a party or by
which Anchor is bound, or to which the property of Anchor is subject, or
c. Violate any statute or law or any judgment, decree, order,
regulation or rule of any court or governmental authority.
SECTION 4. CONTRACTS AND COMMITMENTS. Except as previously disclosed to
CSI in writing:
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a. Anchor has no agreements, contacts, commitments or restrictions
relating to its business, operations, or prospects;
b. Anchor has no debt obligation for borrowed money, or guarantees of or
agreements to acquire money, including guarantees of or agreements to acquire
any such debt obligation of others; and
c. Anchor has no contracts with officers, employees, agents, consultants,
advisors, or sales representatives. All contracts, agreements, commitments or
restrictions previously disclosed to CSI in writing are valid, binding, and
enforceable to Anchor in accordance with their respective terms, and true and
complete copies of those contracts, agreements, commitments, or restrictions
have been prior to the date of this Agreement delivered to CSI. Anchor has
complied in all respects with all such agreements, contracts, commitments, and
restrictions and is not in default under or in violation of, nor is there any
valid basis for any claim of default under or violation of, any agreement,
contract, commitment or restriction to which it is a party or by which it is
bound. Anchor has not granted or been granted any waiver or forbearance with
respect to any such agreements, contracts, commitments and restrictions, and
no other contracting party is in default under any of them.
SECTION 5. LITIGATION. There is no action, suit, inquiry, proceeding or
investigation by or before any court or governmental or other regulatory or
administrative agency or commission pending or threatened against or
involving Anchor or ▇▇▇▇▇▇▇▇▇, or which questions or challenges the validity
of this Stock Purchase Agreement or any action taken or to by taken by Anchor
or ▇▇▇▇▇▇▇▇▇ pursuant to this Stock Purchase Agreement or in connection with
the transactions contemplated by this Agreement; nor is there any valid
basis for any such action, proceeding or investigation. Anchor and ▇▇▇▇▇▇▇▇▇
are not subject to any judgment, award, order, writ, injunction, arbitration,
decision or decree entered in any lawsuit or proceeding, except as previously
disclosed to CSI in writing.
SECTION 6. COMPLIANCE WITH LAW. Anchor and ▇▇▇▇▇▇▇▇▇ have complied, and
are currently in compliance, with all applicable laws, regulations and other
requirements of all national governmental authorities, and of all states,
municipalities and other political subdivisions and agencies of government
having jurisdiction over Anchor and ▇▇▇▇▇▇▇▇▇. Anchor and ▇▇▇▇▇▇▇▇▇ have not
received any notification of any asserted present or past failure by it to
comply with such laws, rules, or regulations.
SECTION 7. CONSENTS AND APPROVALS. Except as previously disclosed to CSI
in writing, (a) no consent, approval or authorization of, or declaration,
filing or registration with, any governmental or regulatory authority and (b)
no consent of any other person,
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including, without limitation, consents form parties to loans, contracts,
leases or other agreements, is required in connection with the execution,
delivery and performance of this Stock Purchase Agreement.
SECTION 8. TAXES. Anchor and ▇▇▇▇▇▇▇▇▇ have duly and timely filed, and
warrant that they will duly and timely file, all federal, state or local tax
reports, returns and forms (including all schedules, amendments and
attachments) required to by filed by Anchor and ▇▇▇▇▇▇▇▇▇ and have paid in
full or discharged all such taxes.
SECTION 9. BROKERS AND FINDERS. Neither Anchor nor any of its officers,
directors, or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions, or finders' fees in connection
with the transactions contemplated by this Stock Purchase Agreement.
SECTION 10. DISCLOSURE. No representations or warranties by Anchor or
▇▇▇▇▇▇▇▇▇ in this Stock Purchase Agreement and no statement contained in any
document, certificate, or other writing (including, without limitation, any
financial statements), furnished or to be furnished by Anchor or ▇▇▇▇▇▇▇▇▇ to
CSI or any of its representatives pursuant to the provisions of this
Agreement or in connection with the transactions contemplated by this
Agreement, contains or will contain any untrue statement of material fact, or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statement in this
Agreement not misleading. Anchor has no liabilities or obligations of any
nature, absolute, accrued, contingent or otherwise, which were not fully
reflected or reserved against in Anchor's financial statements, except for
liabilities and obligations incurred in the ordinary course of business and
consistent with past practice since the date of that financial statement; and
the reserves reflected in the financial statements are adequate, appropriate
and reasonable.
SECTION 11. INTERIM ALTERATIONS. Since the date of the financial
statement, the business of Anchor has been conducted only in the ordinary and
usual course consistent with past practice. Since the date of the financial
statement, there have not been any adverse changes in the financial
condition, assets or results of operation of Anchor. Since that date these
assets have not been affected in any way as a result of flood, fire,
explosion or other casualty (whether or not covered by insurance). Anchor and
▇▇▇▇▇▇▇▇▇ are not aware of any circumstances which may cause Anchor to suffer
any adverse change in its business, operations or prospects.
SECTION 12. BANK ACCOUNTS. Anchor has provided in writing to CSI the
names and locations of all banks, savings and loan associations and other
financial institutions at which Anchor maintains safe deposit boxes of
accounts of any nature and the names of all persons
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authorized to draw on those accounts, make withdrawals from those accounts,
or have access to those accounts. At the Closing, Anchor will deliver to CSI
copies of all records, including all signature or authorization cards,
pertaining to such bank accounts.
Section 13. PERSONNEL INFORMATION.
a. Anchor is not a party to any contract with any labor organization,
nor has Anchor agreed to recognize any union or other collective bargaining
unit, nor has any union or other collective bargaining unit been certified as
representing any of Anchor's employees. Anchor has no knowledge of any
organizational effort currently being made or threatened by us on behalf of
any labor union with respect to employees of Anchor. Anchor has not
experienced any strikes, work stoppages, grievances proceedings, claims of
unfair labor practices, filed or threatened to be filed, or other significant
labor difficulties of any nature, nor are there any material controversies
pending or threatened between Anchor and any of Anchor's employees.
b. Anchor has compiled with all laws relating to the employment of
labor, including, without limitation, the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (29 UCSA Sections 1001 et seq), and
those laws relating to wages, hours, collective bargaining, unemployment,
insurance, workers' compensation, equal employment opportunity, and payment
and withholding of taxes.
SECTION 14. EMPLOYEE BENEFIT PLAN. Anchor warrants and represents that
no employee benefit plan of any kind, including without limitation, a plan
qualifier under ERISA, is in force or has been in force at any time during
the existence of the corporation or its business operations. Anchor further
agrees to indemnify and hold CSI harmless from any and all claims, liability
or costs whatsoever, including without limitation, costs of defense by any
former employee regarding the existence, administration, benefits,
distributions or any other matter relating to employee benefit plans of any
kind.
SECTION 15. GUARANTY OF ▇▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇▇ hereby jointly and
severally, unconditionally and irrevocably, guarantees to CSI the due and
timely performance by Anchor of all obligations of Anchor under this
Agreement, including, without limitation, the warranties and representations
of Anchor pursuant to this Article of this Agreement and expecting therefrom,
those obligations of Anchor assumed by CSI under this Agreement and those
obligations of Anchor arising from transactions occurring after closing. The
obligations of ▇▇▇▇▇▇▇▇▇ as guarantor under this Agreement is as primary
obligor and not as surety, and CSI will have no obligation to make any demand
upon, give any notice to, or exhaust its remedies against Anchor prior to or
as a condition to enforcing the ▇▇▇▇▇▇▇▇▇ obligations as guarantor under this
Agreement. The ▇▇▇▇▇▇▇▇▇ obligations as guarantor will
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be unconditional and irrespective of the validity or enforceability of any
other provision of this Agreement and will survive the Closing of this Sale.
Their guarantee shall specifically exclude in any and all obligations assumed
by CSI and any and all claims arising out of transactions of Anchor or CSI
after the date of closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CSI
CSI represents and warrants to Anchor and ▇▇▇▇▇▇▇▇▇ as follows:
SECTION 1. CORPORATE ORGANIZATION. CSI is a corporation duly organized,
validly existing and in good standing under the laws of the State of
California and has full corporate power and authority to:
a. Carry on its business as it is now being conducted; and
b. Own the properties and assets it now owns.
SECTION 2. AUTHORIZATION. CSI has full corporate power and authority to
enter into this Stock Purchase Agreement and to carry out the transactions
contemplated by this Agreement. CSI has taken all actions required by law or
otherwise to authorize the execution and delivery of this Stock Purchase
Agreement, and the consummation of the transactions contemplated by this
Agreement. This Stock Purchase Agreement is upon execution a legal, valid and
binding agreement of CSI, enforceable against it in accordance with its
terms, except that (a) enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws in effect now or after the
date of this Agreement relating to creditors' rights and (b) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding may be brought.
SECTION 3. NO VIOLATION. Neither the execution and delivery of this
Stock Purchase Agreement nor the consummation of the transactions
contemplated by this Agreement will:
a. Violate any provision of the Articles of Incorporation or Bylaws
of CSI;
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b. Violate, or be in conflict with, or constitute a default (or an
event which, with notice or lapse of time or both, would continue a default)
under, or result in the termination of or accelerate the performance required
by, or cause the acceleration of the maturity of any debt or obligation
pursuant to, or result in the creation or imposition of any security
interest, lien or other encumbrance upon any property or assets of CSI under,
any agreement or commitment to which CSI is a party or by which CSI is bound,
or to which the property of CSI a subject; or
c. Violate any statute or law or any judgment, decree, order,
regulation or rule of any court or governmental authority.
SECTION 4. COMPLIANCE WITH LAW. CSI has complied, and is currently in
substantial compliance, with all applicable laws, regulations and other
requirements of all national governmental authorities, and of all states,
municipalities and other political subdivision and agencies of government,
having jurisdiction over CSI. CSI has not received any notice of any asserted
present or past failure by it to comply with such laws, rules or regulations.
SECTION 5. CONSENTS AND APPROVALS. Except as previously disclosed to
Anchor and ▇▇▇▇▇▇▇▇▇ in writing, (a) no consent, approval, or authorization
of, or declaration, filing, or registration with any governmental or
regulatory authority; and (b) no consent of any other person, including,
without limitation, consents from parties to loans, contracts, leases, or
other agreements, are required in connection with the execution, delivery and
performance of this Stock Purchase Agreement.
ARTICLE IV
CONFIDENTIALITY
Each party to this Agreement will hold and will cause its consultants
and advisors to hold in strict confidence, unless compelled to disclose by
judicial or administrative process or, in the opinion of its counsel, by
other requirements of law, all documents and information concerning the other
party furnished it by such other party or its representatives in connection
with the transactions contemplated by this Agreement (except to the extent
that such information can be shown to have been (a) previously known by the
party to which it was furnished, (b) in the public domain through no fault of
such party, or (c) later lawfully acquired from other sources by the party to
which it was furnished), and each party will not release or disclose such
information to any other person except its auditors, attorneys, financial
advisors, bankers and other consultants and advisors (whom each party will
cause to hold such information in strict confidence) in connection with this
Agreement. If the transactions contemplated by this Agreement are not
consummated, such confidence will be maintained except to the extent that
information comes into the public domain through no
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fault of the party required to hold it in confidence, and that information
will not be used to the detriment of, or in relation to any investment in,
the other party and all such documents (including copies) will be returned to
the other party immediately upon the written request of that other party.
ARTICLE V
CONDUCT OF BUSINESS OF ANCHOR PENDING CLOSING
Pending the Closing, and except as otherwise expressly consented to or
approved by CSI in writing:
SECTION 1. INSURANCE; PROPERTY. Anchor will insure all property, real,
personal and mixed, owned or leased by Anchor, against all ordinary and
insurable risks; and all such property will be used, operated, maintained and
repaired in a careful and reasonably efficient manner.
SECTION 2. NO DEFAULT. Anchor will not do any act or omit to do any act,
or permit any act or omission to act, will cause a breach of any contract or
commitment of Anchor or which would cause the breach of any representation or
warranty made under this Agreement.
SECTION 3. TAX RETURNS. Anchor and ▇▇▇▇▇▇▇▇▇ will prepare and file all
federal, state, local and foreign reports, returns, or other information, and
all schedules, amendments or other information with respect to those filings,
required to be filed by them with any taxing authority, and will pay the
taxes shown on those reports or returns or any greater amounts otherwise due
or owing.
SECTION 4. REGULAR COURSE OF BUSINESS. Anchor will carry on its business
diligently prior to the Closing. Anchor will not institute any new methods of
purchase, sale, lease, management, accounting or operation or engage in any
transaction or activity, enter into any agreement or make any commitment,
except in the ordinary course of business and consistent with past practice.
SECTION 5. AMENDMENTS; CAPITAL CHANGES; SUBSIDIARIES. No change or
amendment will be made in the Articles of Incorporation or Bylaws of Anchor.
Anchor will not issue or sell any shares of its capital stock or other
securities, acquire, directly or indirectly, by redemption or otherwise, any
capital stock, reclassify or split-up any capital stock, declare or pay any
dividends on that stock in cash, securities or other property or make
12
any other distribution with respect to that stock, or grant or enter into any
options, warrants, call or commitments of any kind with respect to that
stock. Anchor will not organize any subsidiary, acquire any capital stock or
other equity securities of any corporation or acquire any equity or ownership
interest in any business.
SECTION 6. ORGANIZATION. Anchor will use its best efforts to preserve
its corporate existence and business organization intact, to keep available to
CSI its key employees, and to preserve for CSI its relationships with
licensors, suppliers, customers, and others having business relations with it.
SECTION 7. CERTAIN CHANGES. From the date hereof until closing of the
transaction, Anchor will not:
a. Borrow or agree to borrow any funds or incur, or assume or become
subject to whether directly or by way of guarantee or otherwise, any
obligation or liability (absolute or contingent), except obligations and
liabilities incurrent in the ordinary course of business and consistent with
past practice;
b. Pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, contingent or otherwise), other than the payment
discharge or satisfaction in the ordinary course of business and consistent
with past practice of liabilities or obligations reflected or reserved against
in the Anchor financial statements or incurred in the ordinary course of
business and consistent with past practice since the date of the Anchor
financial statements;
c. Permit or allow any of its property or assets (real personal or
mixed, tangible or intangible) to be subjected to any mortgage, pledge, lien
(including any lien for taxes) or encumbrances;
d. Cancel any contracts or agreements or waive any claims or rights
or substantial value or sell, transfer, or otherwise dispose of any of its
properties or assets, except in the ordinary course of business and
consistent with past practice;
▇. ▇▇▇▇▇ any general increase in the compensation of officers or
employees (including any increase pursuant to any bonus, pension, profit
sharing or other plan or commitment) or any increase in the compensation
payable or to become payable to any officer or employee;
f. Pay, loan or advance any amount to, or sell, transfer or lease
any properties or assets to, or enter into any agreements or arrangement with,
any of its officers or directors or
13
any Affiliate of any of its officers or directors;
g. Change any of the banking or safe deposit arrangements;
▇. ▇▇▇▇▇ or extend any power of attorney or act as guarantor,
surety, cosigner, endorser, comaker, indemnitor or otherwise in respect of the
obligation of any person, corporation, partnership, joint venture,
association, organization of other entity; or
i. Agree, whether in writing or otherwise, to do any of the foregoing.
SECTION 8. NO DEFAULT. Anchor and ▇▇▇▇▇▇▇▇▇ will not do any act or omit
to do any act or permit any act or omission to act, which will cause a breach
of any contract or commitment of Anchor or which would cause the breach of
any representation or warranty made under this Agreement.
SECTION 9. COMPLIANCE WITH LAWS. Anchor will duly comply with all laws
applicable to it and its properties, operations, business and employees.
ARTICLE VI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
SECTION 1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations and warranties of the parties to this Agreement contained in
this Agreement or in any certificates or other documents delivered at the
execution of this Agreement or at the Closing will not be deemed waived or
otherwise affected by any investigation made by any party. All
representations and warranties made by any party in this Agreement or
pursuant to this Agreement will survive the Closing and any investigation at
any time made by or on behalf of the other party and continue for a period of
five (5) years following the Closing Date, unless, on or prior to such date,
written notice has been given pursuant to this Agreement of a claim for CSI's
Damages or ▇▇▇▇▇▇▇▇▇'▇ Damages (as such terms are defined in this Agreement).
Provided that such a claim has been timely made, it may continue to be
asserted beyond the period of five (5) years following the Closing Date. This
Section will have no effect upon any other obligations of the parties to this
Agreement, whether to be performed before or after the Closing Date.
SECTION 2. STATEMENTS AS REPRESENTATIONS. All statements contained in
this Agreement or in any certificate, schedule, list, exhibit, document or
other writing delivered pursuant to this Agreement or in connection with the
transactions contemplated by this Agreement will be deemed representations
and warranties within the meaning of this Article of this Agreement.
14
ARTICLE VII
RIGHT OF OFFSET; AGREEMENTS TO INDEMNIFY
SECTION 1. RIGHT OF OFFSET. ▇▇▇▇▇▇▇▇▇ hereby grants to CSI the right to
offset against any unpaid obligation of CSI to ▇▇▇▇▇▇▇▇▇, at the time
incurred, the actual cost of any demands, claims, actions or causes of
action, assessments, losses, damages, liabilities, cost and expenses,
including without limitation, interest, penalties, and attorney fees,
asserted or imposed upon or incurred by ▇▇▇▇▇▇▇▇▇ or Anchor or any of their
affiliates pursuant to the agreements of indemnification set forth in this
Agreement. The right to offset so granted shall be governed by and operate
according to the provisions and procedures set forth herein.
SECTION 2. AGREEMENTS TO INDEMNIFY.
a. Subject to the conditions and provisions set forth in this
Agreement, ▇▇▇▇▇▇▇▇▇ will pay, indemnify, defend and hold harmless CSI and
each Affiliate of CSI from and against all demands, claims, actions or causes
of action, assessments, losses, damages, liabilities, costs and expenses,
including, without limitation, interest, penalties and attorney fees,
asserted against or imposed upon or incurred by Anchor, ▇▇▇▇▇▇▇▇▇, or any
of their affiliates (collectively, "CSI's Damages"):
(1) Resulting from a breach of any representation, warranty,
covenant, agreement or obligation of Anchor or ▇▇▇▇▇▇▇▇▇ contained in or made
pursuant to this Agreement;
(2) With respect to the period prior to the Closing, whether the
claim be asserted prior to or after the Closing, by reason of or resulting
from, or alleged to be by reason of or resulting from, liabilities or
obligations of, or claims against, Anchor or ▇▇▇▇▇▇▇▇▇ in connection with
Anchor's ownership or operation relating to the operation of Anchor prior to
the Closing, except as expressly assumed by CSI pursuant to this Agreement or
covered by valid and existing insurance coverage provided by Anchor or CSI;
(3) The failure of Anchor or ▇▇▇▇▇▇▇▇▇ to pay, perform or discharge
any of their obligations, liabilities or contracts not assumed by CSI pursuant
to this Agreement;
(4) Any and all liabilities, direct or indirect, absolute or
contingent, for taxes (a) of Anchor or ▇▇▇▇▇▇▇▇▇ or any member of the
"affiliated group" (within the meaning of section 1504(a) of the Internal
Revenue Code of 1986 (26 USCA Section 1504(a)) of which Anchor or ▇▇▇▇▇▇▇▇▇
is a member incurred prior to the Closing, or (b) incurred in connection with
the operations or businesses of Anchor ▇▇▇▇▇▇▇▇▇ on or prior to the Closing,
including, without limitation, any property (real, personal or mixed), sales,
or other taxes which are not due or assessed until after the Closing, but
which are attributable to any period
15
prior to and including the Closing; and
(5) Any and all taxes due as a result of the transactions
contemplated by this Agreement.
b. Subject to the conditions and provisions set forth in this
Agreement, CSI will pay, indemnify, defend and hold harmless ▇▇▇▇▇▇▇▇▇ from
and against all demands, claims, actions or causes of action, assessments,
losses, damages, liabilities, costs and expenses, including, without
limitation, interest, penalties and attorney fees, asserted against or
imposed upon or incurred by Anchor or ▇▇▇▇▇▇▇▇▇ resulting from a breach of
any representation, warranty, covenant, agreement or obligation of CSI
contained in or made pursuant to this Agreement or arising from CSI
operations after closing (collectively, "▇▇▇▇▇▇▇▇▇'▇ Damages").
SECTION 3. PROCEDURE. In the event of any claim for CSI's Damages or
▇▇▇▇▇▇▇▇▇'▇ Damages under this Agreement, the party claiming the right to
indemnify (the "Claimant") will promptly notify the indemnifying party (the
"Indemnitor") in writing of that claim, which notice will set forth the basis
of the claim for indemnity and, if then determinable by Claimant, a
reasonable estimate of the amount thereof (or, if in Claimant's good faith
opinion, no such reasonable estimate can then be made by it, the maximum
potential damages that, in Claimant's good faith opinion, might be sustained
in connection with such claim).
SECTION 4. TERMS AND CONDITIONS OF INDEMNIFICATION. The obligations and
liabilities of ▇▇▇▇▇▇▇▇▇ with respect to claims for CSI's Damages and the
obligations and liabilities of CSI with respect to claims for ▇▇▇▇▇▇▇▇▇'▇
Damages resulting in either case from the assertion of liability by third
parties ("Third Party Claims"), are subject to compliance by Claimant with
the following terms and conditions:
a. Claimant will give Indemnitor prompt notice of any Third Party
Claim asserted against or imposed upon or incurred by Claimant, and
indemnitor will undertake the defense of that claim by representatives of its
own choosing.
b. In the event that Indemnitor, within a reasonable time, not to
exceed thirty (30) days, after notice of any such Third Party Claim, fails to
defend, Claimant will (upon further notice to Indemnitor) have the right to
undertake the defense, compromise or settlement of such Third Party Claim for
the account of Indemnitor, subject to the right of Indemnitor to assume the
defense of such Third Party Claim at any time prior to settlement, compromise
or final determination thereof.
16
c. Anything herein to the contrary notwithstanding:
(1) If there is a reasonable probability that a Third Party Claim
may materially and adversely affect Claimant or any Affiliate of Claimant
(other than as a result of the payment of money damages). Claimant will have
the right to defend such Third Party Claim, or to compromise or settle such
Third Party Claim for the account of Indemnitor with the prior written
consent of Indemnitor, which consent will not be unreasonably withheld, and
(2) No Indemnitor will, without Claimant's written consent, settle
or compromise any Third Party Claim or consent to entry of any judgment which
does not include as an unconditional term thereof the release by the third
party claimant or the plaintiff of Claimant from all further liability in
respect of such Third Party Claim.
SECTION 5. REMEDIES CUMULATIVE. The remedies provided in this Agreement
will be cumulative and will not preclude any party from asserting any other
rights or seeking any other remedies against any other party or its
successors or assigns.
ARTICLE VIII
TERMINATION AND ABANDONMENT
SECTION 1. TERMINATION EVENTS. As used in this Agreement, a "Termination
Event" will be caused:
a. By any party upon the material breach of any representation or
warranty by any party; or
b. By any party upon the failure of a party to timely and substantially
perform any covenant or agreement under this Agreement and the continuation
of that failure for fifteen (15) business days after receipt of written
notice of that failure from the nonbreaching party.
SECTION 2. METHODS OF TERMINATION. The transactions contemplated by this
Agreement may be terminated and/or abandoned at any time, but not later
than the Closing:
a. By mutual consent of ▇▇▇▇▇▇▇▇▇, Anchor, or CSI;
b. By ▇▇▇▇▇▇▇▇▇, if CSI causes a Termination Event and the same is not
cured within the applicable time period as provided in this Agreement,
provided that no Termination Event has been caused by Anchor or ▇▇▇▇▇▇▇▇▇ and
is then continuing; or
c. By CSI, if Anchor or ▇▇▇▇▇▇▇▇▇ cause a Termination Event and the same
is not
17
cured within the applicable time period as provided in this Agreement,
provided that no Termination Event has been caused by CSI and is then
continuing.
SECTION 3. PROCEDURE ON TERMINATION. In the event of termination and/or
abandonment of the transactions contemplated by this Agreement, whether by
all parties or by ▇▇▇▇▇▇▇▇▇ of CSI alone, written notice of that fact will
forthwith be given to the other parties to this Agreement and the
transactions contemplated by this Agreement will be terminated and/or
abandoned without further action by CSI, Anchor, or ▇▇▇▇▇▇▇▇▇. If such
transactions are terminated and/or abandoned as provided in this Agreement,
then:
a. Each party will redeliver all documents, work papers and other
material of any other party relating to the transactions contemplated by this
Agreement, whether so obtained before or after the execution of this
Agreement, to the party furnishing those documents; and
b. No party to this Agreement will have any liability or further
obligation to any other party to this Agreement except as specifically set
forth in Article IV and this Article VIII.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 1. AMENDMENT AND MODIFICATION. The terms of this Stock Purchase
Agreement, including its Exhibits, may be amended, modified, or supplemented
only by written agreement of CSI, Anchor, and ▇▇▇▇▇▇▇▇▇ executed prior to
Closing.
SECTION 2. WAIVER OF COMPLIANCE. Any failure of CSI, Anchor, or
▇▇▇▇▇▇▇▇▇ to comply with any obligation, covenant, agreement or condition in
this Agreement may be expressly waived in writing by the other party, but that
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition will not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.
SECTION 3. SEVERABILITY. In the event that any term or provision of this
Stock Purchase Agreement is determined to be void, unenforceable or contrary
to law, the remainder of this Agreement will continue in full force and
effect provided that such continuation would not materially alter the terms
of this Agreement or diminish the benefits of the Agreement for any party.
SECTION 4. ARBITRATION. Any dispute arising out of this Agreement shall
be submitted to the American Arbitration Association for resolution. The
arbitration shall be scheduled to take place in San Diego County, California,
and all of the fees and costs in the
18
arbitration shall be shared equally by the parties. Attorneys' fees shall be
awarded to the prevailing party in addition to any award obtained therein,
but the arbitrator shall have no power to alter or amend this Agreement, or
to award any relief inconsistent with the provisions herein or unavailable in
a court of law.
SECTION 5. NOTICES. All notices under this Agreement, including the
Notice of Exercise, will be in writing and will be deemed to be duly given if
delivered in person or sent by registered or certified mail, postage prepaid:
a. If to ▇▇▇▇▇▇▇▇▇:
Mr. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
and to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, #▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or to such other address as ▇▇▇▇▇▇▇▇▇ will have designated by proper
notice.
b. If to CSI:
Composite Solutions, Inc.
Attn: ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
and to
▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or to such other address as CSI will have designated by proper notice.
SECTION 6. ASSIGNMENT. This Stock Purchase Agreement and all of its
provisions will be binding upon and inure to the benefit of the parties to
this Agreement and their respective
19
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations under this Agreement will be assigned,
voluntarily or involuntarily, by any of the parties without the prior written
consent of the other parties.
SECTION 7. GOVERNING LAW. This Stock Purchase Agreement and the legal
relations among the parties to this Agreement will be governed by and
construed in accordance with the laws of the State of California, without
regard to its conflicts of law doctrine.
SECTION 8. WORD USAGE. As used in this Agreement, the plural form of any
noun includes the singular and the singular includes the plural, unless the
context requires otherwise. Each of the masculine, feminine and neuter forms
of any pronoun include all such forms, unless the context requires otherwise.
SECTION 9. HEADINGS. The Article and Section headings contained in this
Stock Purchase Agreement are inserted for convenience only and will not
constitute a part of this Agreement or affect in any way the meaning or
interpretation of this Stock Purchase Agreement.
SECTION 10. THIRD PARTIES. Except as specifically set forth or referred
to in this Agreement, nothing expressed or implied in this Agreement is
intended, or will be construed to confer upon or give to any person or
corporation other than the parties to this Agreement and their successors or
assigns, any rights or remedies under or by reason of this Stock Purchase
Agreement.
SECTION 11. ENTIRE AGREEMENT. This Stock Purchase Agreement, including
its Exhibits, and the other documents, agreements, and certificates delivered
pursuant to the terms of this Agreement, set forth the entire agreement and
understanding of the parties in respect of the subject matter contained in
this Agreement, and supersede all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party to this
Agreement.
SECTION 12. COUNTERPARTS. This Stock Purchase Agreement may be executed
in one or more counterparts, each of which will be deemed an original, but
all of which together will constitute one and the same instrument.
20
IN WITNESS WHEREOF, the parties to this Agreement have executed this
Stock Purchase Agreement as of August 31, 2000, at San Diego, California.
Penultimo, Inc.
a California corporation
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------
By: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Its: President and Secretary
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Shareholder
Composite Solutions, Inc.
a Florida corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------
Its: President, COO
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------
Its: Secretary
21
